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Technical Note—On the Relation Between Several Discrete Choice Models

Author

Listed:
  • Guiyun Feng

    (Department of Industrial and Systems Engineering, University of Minnesota, Minneapolis, Minnesota 55455)

  • Xiaobo Li

    (Department of Industrial and Systems Engineering, University of Minnesota, Minneapolis, Minnesota 55455)

  • Zizhuo Wang

    (Department of Industrial and Systems Engineering, University of Minnesota, Minneapolis, Minnesota 55455)

Abstract

In this paper, we study the relationship between several well known classes of discrete choice models, i.e., the random utility model (RUM), the representative agent model (RAM), and the semiparametric choice model (SCM). Using a welfare-based model as an intermediate, we show that the RAM and the SCM are equivalent. Furthermore, we show that both models as well as the welfare-based model strictly subsume the RUM when there are three or more alternatives, while the four are equivalent when there are only two alternatives. Thus, this paper presents a complete picture of the relationship between these choice models.

Suggested Citation

  • Guiyun Feng & Xiaobo Li & Zizhuo Wang, 2017. "Technical Note—On the Relation Between Several Discrete Choice Models," Operations Research, INFORMS, vol. 65(6), pages 1516-1525, December.
    • Handle: RePEc:inm:oropre:v:65:y:2017:i:6:p:1516-1525
    DOI: 10.1287/opre.2017.1602
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    References listed on IDEAS

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    1. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, September.
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    7. Aydın Alptekinoğlu & John H. Semple, 2016. "The Exponomial Choice Model: A New Alternative for Assortment and Price Optimization," Operations Research, INFORMS, vol. 64(1), pages 79-93, February.
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